Thursday, July 8, 2010

Ratio Analysis

One pattern that has only been seen at bottoms in the past 18 months is a 4 point pattern move when looking at Advance/Decline Ratios.

1) breach of the 2.5 ratio where the bottom occurs
2) retrace on the ratio by the first "buy the dip"
3) followed thereafter, another attempt to break lower in price but making a lower high on the ratio
4) and lastly followed by a strong move below the 1.0 ratio

This pattern has only ever occurred at previous bottoms, I marked each occurrence with vertical lines and each time in the past it has held up as a bottom with a decent size rally to follow.

Jul-08 12:30PM: just went over to evilspeculator and realized he had done the same exact analysis in one of his protected posts yesterday. I had been waiting to post this chart since Sunday (as I had indicated the day before) to wait for the pattern to confirm - quite funny that two Germans spent their weekend looking at this same chart lol

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